It was announced the other day that the popular messaging app kik, was shutting down in the near future and focusing its attention on its cryptocurrency kin. The founder and CEO of the app, Tim Livingston said it made sense because it would allow them to fund their fight against the SEC, which he admitted they would loose. This move by kik is a massive blunder for a couple reasons. A kik shutdown hurts users and the company.
The kik shutdown
kik has had some issues in the last few years. Firstly, was its stance on privacy. They allowed anyone to sign up and it wasn’t connected to a phone, just an email. Which is nice because there is a bit of privacy built into the structure. However, this privacy allowed a sub group of users to use the app for grooming children and sharing child pornography. This group of users brought a lot of attention to the app and even was the subject of a some lawsuits. As gross and damning as the pedophilia stuff was, their biggest issue was an illegal ICO for their in-house crypto-currency Kin.
The SEC Attacks
The SEC filed a lawsuit against kik over its Initial Currency Offering, which they said was illegal at the time. Kik has spent the last few years fighting this lawsuit and it is looking like they might come out on the loosing side of it. This is causing the company to hemorrhage money. In an effort to make up some money, they have decided the best option would be to shut down the app, fire 80 people and focus on the Kin side of things. Basically, the expenses used to keep the app going and paying developers will go to fighting the lawsuit.
Attack of the Dumb
Livingston, contends that with the user base that Kin has and the number it projects it will gain over the next couple years, that it will be enough to fund the lawsuit and keep the company growing. In his blog post, he states there 2M earners of the currency and 600k transactions a month and that any loss of from people who us kik will be made up for… somehow. Livingston and the kik board have made a fatal mistake. The kik shutdown is throwing all their eggs into the crypto market and one they created for use with their app. They are looking to focus their attention to be handle billion transactions a day with their blockchain, make a mobile wallet and expand the growth of the users. All noble goals, but ultimately it will fail.
The End of kik and Kin
Let’s be honest here. Kin is nothing without kik.
Up until this announcement, I didn’t even know Kin existed. I’ve been an active kik user for the last 6 years. Kin was set up most as an in app currency to allow people to buy stuff and trade among themselves. I am not a big crypto fan so I don’t follow the trends or numbers. But looking at the market for cryptocurrency for Kin, it looks like their gamble has failed. Its been on slow decline for the last few months and took a massive hit in the last 48 hours. Crypto is much like real currency, in that its only worth anything when people have faith in it. I think many of the users of kik were like me and didn’t even know about Kin.
In 2016 they claimed to have 300 millions of their kik app and all the metrics show it has been growing ever since. It is not unreasonable to estimate they have at least 500M, if not 700M users at this point. A bit of monetization and they could be raking in more money than they could ever dream.
What’s Really Going On Here
My guess to what is really going on?
If you don’t know who Tencent is, you should. They are a Chinese company with their hands in everything lately, they own part of Reddit, kik Ubisoft, Riot Games, Epic Games, movie production companies and the list goes on and on. My money is on that Tencent is hoping that they enter the cryptocurrency market. They will become one of the dominate players in that game.
Not for the money made from the currency trading, but for the data. All of their investments have been largely to get access to massive amounts of data of people around the world. A cryptocurrency and a high speed blockchain “owned” by them (and let’s not kid ourselves the Chinese government) would give them all the marketing data they need. Such a combo of services would make Apple’s wall garden look like speed bumps. They could offer up tailored services and products and keep you in their sphere.
We’ll see how this plays out. Maybe I am wrong. I often am.